Home Depot (NYSE: HD) is a Dividend Contender, and its stock is being accumulated. Dividend Contenders are stocks that have increased their dividends for a sufficient number of years to be on track for inclusion in the Dividend Aristocrats Index. Inclusion requires membership in the S&P 500 and 25 years of annual increases, a figure Home Depot will achieve in 2031.
The critical detail is that including it in the Dividend Aristocrats Index significantly increases its ownership, as ETFs and funds pegged to it will have to buy, and, more importantly, among long-term buy-and-hold investors. Increased ownership among buy-and-hold investors is known to reduce market volatility, ultimately enhancing total returns over time. The dividend provides an annual yield of 2.5%, with shares trading close to $380, and the payout ratio remains a sustainable 60% of the projected earnings.
HD Stock Accumulation Gains Momentum in Early 2026
As for accumulation, analysts and institutional trends suggest this market is buying stock. The institutional group, which owns more than 70% of the stock, has been accumulating on balance for years. The 2025 activity includes some selling near year’s end, but the annualized balance is greater than $2 bought for each sold, and it accelerated in Q1 2026. Activity in early Q1 2026 accumulated nearly $3 for every $1 sold and is likely to remain bullish, given the business quality and long-term outlook.
The fiscal 2026 guidance was tepid, with revenue and earnings midpoints below the consensus targets, but the analyst response suggests worse was expected. As it stands, the company forecasts continued growth, albeit at a low single-digit pace, and improved quality. Earnings quality is critical, as it underpins the dividend outlook and the distribution growth rate. The company doesn’t make aggressive increases but can sustain its low-single-digit compound annual growth rate indefinitely in this environment.
And the analysts’ response aligns with accumulation. MarketBeat tracked no revisions immediately following the release, leaving the prerelease trends intact. They included moderated price targets affirming the Moderate Buy rating and consensus-or-better price outlook. The consensus as of late February forecasts a 10% increase in stock prices from critical support levels, aligning the market with the top of its trading range.
Home Depot Underwhelms With Guidance: Q4 Results Better Than Expected
Home Depot struggled in Q4 2025 with tepid comps and a tough comparison, leading to a 3.8% year-over-year revenue decline. That said, the $38.2 billion in net revenue is 25 basis points better than expected and compounded by positive internals. The comps are tough due to an extra week in last year’s reporting period; adjusting for it, revenue growth is present, and margin pressures were far less. Organically, comps are up 0.4% systemwide, with U.S. comps up by 0.3%, driven by increased ticket averages.
Margin news is OK. The company experienced margin pressure and deleveraging, but offset it with quality improvement. The net result is a 13% contraction in income and a 41-cent decline in adjusted earnings, full 20 cents better than forecast. Taking out the 30 cents attributed to 2024’s extra week narrows the decline to nearly a dime.
Home Depot Catalysts Ahead: But Risks Remain
Home Depot’s 2026 catalysts include potential for housing market stabilization, demand for large projects as homeowners extract equity, and housing market dynamics. While housing markets remain muted in early 2026, signs of improvement began to emerge in late 2025, suggesting an eventual, albeit slow, recovery. Home Depot risks include the timing of the recovery, which is tied to Fed policy and interest rates. The headwind is that forecasts for rate reductions are cooling, suggesting a longer glide path for the housing market recovery than previously believed.
Home Depot’s price action is favorable, again, risks remain. The market jumped more than 3% at the open, creating a small gap on the daily chart, and indicating support at pre-release levels. The market is poised to advance in this scenario, potentially rising to the top of the range near $420, but there is a hurdle. Resistance is evident at the $395 level and may cap gains. If this market fails to advance, it will remain trapped in the lower portion of the two-year trading range, potentially falling to the $340 level before new highs are reached.
Where Should You Invest $1,000 Right Now?
Before you make your next trade, you'll want to hear this.
MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis.
Our team has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and none of the big name stocks were on the list.
They believe these five stocks are the five best companies for investors to buy now...
The article "Home Depot Accumulation Is Underway—Why Dividend Investors Are Watching" first appeared on MarketBeat.
